It’s the middle of the month so it’s time to review my net worth. Last month, my net worth grew from 183K to 193K, so I was expecting a bit a retracement. However, as I followed the stock markets this month I realized that the results for this update should be fantastic. It was better than I thought… my net worth grew to 207K – my biggest gain ever.
The surprise was that it wasn’t the surging stock market that helped the numbers. Homes in the area of my investment property surged and Zillow ranks my home as worth 9K more than last month. (For those new to my site, I consider Zillow be very accurate for the condo since there are many like it and it has a lot of data to go on.) Much of the remainder of my gains, $3,000, were the result of the aforementioned stock market surge.
I didn’t really do much in the way of savings, with the exception of putting more money in my 401K plan. I knew that it would be difficult month for saving with some of the bills from the wedding vendors coming in. I’m not completely off the hook with those bills as some of them went on my credit card to earn points. Towards that end, I was able to charge nearly $900 of the rehearsal dinner on a card that typically earns me 3% on the dollar at restaurants. When we got back home, there was a letter from Chase that they would bump it up to 5% for July and August. I don’t mind getting $45 back from Chase one bit.
I’m not sure if I’d go with the Zillow projection especially as the market moves. Since I believe Zillow bases it’s estimate partially on recent sales, a market that is chaning quikcly is probably not accurately reflects just because the recent sales are usually delayed a few months. In either case, I’m biased agianst revising net worth based on property value changes given the rather illiquid nature of housing. I think it’s better to err on the conservative side. Personally, I’ve marked my property at what I brought it….
I agree somewhat with dong. I’m skeptical about including my house’s equity in my net worth, simply because I don’t consider it a liquid asset.
Lazy Man says
What if you don’t live in your house?
I’m hesitant to discount the house since a large percentage of my net worth is tied in it. Also if I were to pay off the mortgage early it would be money disappearing into the ether.
Lastly, I don’t feel it’s right to ignore the fact that my home has clearly lost value (though it’s almost back to where it was when I bought it). It also wouldn’t be right to ignore that it’s gained value in 20 years (assuming that it has indeed gained value). I just don’t see how you can keep it forever what you paid for it.
Interesting debate about home ownership and renting at one of my other favorite PF blogs.
The Div Guy says
I would have to agree with Lazy Man. If you are able to base the new value on recent sales as well as Zillow, I would use that as my current value. With that said, I will not adjust my home value using Zillow or recent sales as I have no plans to sell and I think adjustments make it difficult to compare my networth calculations.
Lazy Man says
I should note that real estate is a separate line in my spreadsheet, so it’s easy enough to see my “non-real estate” assets.
I say record the real estate at its cost basis. You want to be conservative and there is no value to the up and down swings that zillow provides. Then when you sell youll have a nice bump.
I really need to proof read my comments. Anyhow to me being conservative generally means marking at basis, and if the market really heads south then marking it down as well. I think marking up to conservative estimate fair market value is warranted after a good amount of time has passed. Cost Basis can get very stale after 5-10 years. I just wouldn’t mark it month month based on the estimates from Zillow. I think Zillow combined with some personal knowledge is fine to use, but just not month to month
The Financial Blogger says
There is nothing like looking at your neighborhood to find similar place for sale. I just find out that one of my neighbor is asking for 60K more than I bought last November…
In regards to look at your net worth on a monthly basis, I tend to agree with Dong. You might see you property going up and down in value as the market fluctuate. A yearly estimate for a property seems more accurate to me.
Joseph Sangl says
Nice month!!! It sounds like you are cashflowing the wedding expenses. Did you consider saving up for them and then negotiating with cash to get a bigger discount? It doesn’t work with all businesses, but many will offer substantial discounts.
Lazy Man says
@TheFinancialBlogger: Since there are a quite a bit of similar condos (around 200), it really brings down the volatility.
@Sangl: We saved up a ton of money in advance, no way we could cashflow a wedding for 200 people. Unfortunately most of our connections were military-based and I’ve found that they aren’t very negotiating.
Very nice gain, keeping things diversified will allow the increase to remain. Anything to do with the stock market and with real estate has the potential to bottom out and loose you money too. Hopefully that doesn’t happen.